This guide outlines the events and changed circumstances that mean you should conduct an estate plan review.
Estate planning is an essential aspect of financial planning, ensuring that your wishes are carried out and your assets are distributed according to your desires. However, the documents that make up your estate plans are not static documents and should be reviewed regularly to ensure they remain aligned with your changing circumstances.
Estate plan review triggers
Here are some of the common events that should trigger an estate plan review.
Changes in relationships
Major life events that alter your relationships can significantly impact your estate plan. These include:
● Marriage or divorce: A marriage can introduce new beneficiaries and alter your asset distribution preferences, while a divorce may necessitate removing your former spouse as a beneficiary.
● Birth or adoption of children: The arrival of new family members necessitates updates to your estate plan to include them as beneficiaries and consider their guardianship if you become incapacitated.
● Death of a beneficiary: If a named beneficiary dies before you do, their designated share needs to be redistributed or reallocated.
● Strained relationships with family or friends: If relationships with family members or friends deteriorate, you may need to reconsider their roles as beneficiaries or guardians.
Changes in circumstances of executors, trustees, or guardians
The individuals you appoint as executors, trustees, or guardians play crucial roles in managing your estate and ensuring your wishes are carried out. Changes in their circumstances can affect their ability to fulfil these roles effectively and should prompt anestate plan review. Factors to consider include:
● Divorce or relationship breakdown: Personal conflicts or estrangements may impact their willingness or ability to act in these capacities.
● Bankruptcy or legal rulings: Financial or legal issues could compromise their suitability for these roles.
● High-risk professions or business ventures: Engaging in activities with a higher likelihood of accidents or financial losses could pose risks to the estate.
● Drug or alcohol addictions, gambling problems, or mental illnesses: These issues could impair their judgment and ability to manage your affairs responsibly.
● Accidents, disabilities, or health deterioration: Loss of capacity due to illness or injury could hinder their ability to fulfil their duties.
● Geographical relocation: Living in a different jurisdiction may complicate their ability to manage your estate effectively.
Changes in financial circumstances
Your financial situation can evolve over time, necessitating adjustments to your estate plan to reflect your current assets, liabilities, and financial goals. Common estate plan review triggers include:
● Starting a business or acquiring new assets: New business interests or property acquisitions may require updates to your estate plan to ensure they are properly accounted for and distributed.
● Establishing a self-managed super fund or trust: These structures introduce additional complexities that must be addressed in your estate plan.
● Making loans to family members: Providing financial assistance to family members may impact your asset distribution preferences.
● Taking out life insurance or acquiring foreign assets: These additions to your portfolio require consideration in your estate plan.
● Relocating to a foreign jurisdiction: Changes in domicile can have significant tax implications and may necessitate modifications to your estate plan.
● Altering business structures: Restructuring your business or changing ownership arrangements may impact your estate planning strategies.
Changes in health or loss of capacity
Your own health and capacity can also trigger the need for an estate plan review. Consider seeking updated advice if:
● Your health deteriorates or you experience a significant medical event: Changes in your health may impact your ability to manage your affairs or make informed decisions about your estate.
● Your executor, trustee, or guardian experiences health issues or loss of capacity: If the individuals you have appointed in these roles become incapacitated, you may need to identify replacements.
Review your estate plan regularly
As a general rule of thumb, it’s advisable to review your estate plan every two to three years, or more frequently if you experience significant life changes. Regular reviews ensure that your plan remains aligned with your current circumstances and that your wishes are accurately reflected.
Consulting with an estate planning solicitor can provide you with tailored advice and guidance based on your specific situation. They can help you navigate the complexities of estate planning and ensure your plan is up-to-date and effective.
Summing up
Remember, an estate plan is not a set-and-forget document. It should be a dynamic part of your financial planning, evolving with your life circumstances to ensure that your wishes are carried out as you intend.
Kristy Hatcher is an accomplished Estate Planning Solicitor with Owen Hodge Lawyers. With an impressive reputation that stems from her extensive experience, Kristy’s credentials include a Master of Laws specialising in Wills and Estates. Kristy uses her experience and specialty to achieve outstanding results for her clients. Also read her estate planning checklist
